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Active Disposal, Inc v. City of Darien

March 31, 2010

ACTIVE DISPOSAL, INC; ALL WASTE DISPOSAL APEX INTERIORS, INC.; BOSMAN DISPOSAL; BOXCO, INC.; C.M. ROOF SYSTEMS, INC.; CFS ENTERPRISES, INC; CIRCLE M DUMPSTER SERVICE, INC.; DISPOSAL MANAGEMENT SYSTEMS, INC.; ECONOMY DISPOSAL SERVICES, INC.; FEZE ROOFING, INC.; LAWRENCE E. GUSTAFASON ROOFING, INC.; J.L. ROLL-OFF SERVICE, INC.; K. HOVING RECYCLING & DISPOSAL, INC.; LIBERTY WASTE & RECYCLING SERVICE, INC.; MBL RECYCLING, INC.; MOLENHOUSE ENTERPRISES, INC.; MURPHY ROOFING, INC.; NICHOLAS & ASSOCIATES, INC.; OMNI COMMERCIAL GROUP, INC.; OSTRANDER CONSTRUCTION, INC.; PRAIRIELAND DISPOSAL, INC.; PREMIUM DISPOSAL, INC.; RECYCLING SYSTEMS, INC.; ROLL-ON ROLL-OFF, INC.; TRASH CAN RECYCLING, LLC; WASTEBOX, INC.; AND WASTE ONE, LLC, PLAINTIFFS,
v.
CITY OF DARIEN; CITY OF EVANSTON; CITY OF OAK BROOK TERRACE; CITY OF PROSPECT HEIGHTS; VILLAGE OF ADDISON; VILLAGE OF HOFFMAN ESTATES; VILLAGE OF MT. PROSPECT; VILLAGE OF NILES; VILLAGE OF NORTHFIELD; VILLAGE OF WHEELING; AND VILLAGE OF WILMETTE, DEFENDANTS.



The opinion of the court was delivered by: Matthew F. Kennelly, District Judge

MEMORANDUM OPINION AND ORDER

The plaintiffs in this case are companies that provide hauling and disposal services to customers who use "roll off" containers for waste and recycling, and corporations that would like to use the services of those hauling and disposal companies. The defendants are Illinois municipalities that have adopted ordinances giving exclusive contracts for waste and recycling hauling to waste disposal firms other than the plaintiffs. Plaintiffs allege that defendants' exclusive contracts violate the Contract and Due Process Clauses of the United States Constitution and interfere with competition in violation of the Sherman Act. Plaintiffs also allege that defendants have tortiously interfered with plaintiffs' contracts and prospective economic advantage and have committed antitrust violations under Illinois law. Defendants have moved to dismiss plaintiffs' claims for failure to state a claim pursuant to Federal Rule of Civil Procedure 12(b)(6). For the reasons stated below, the Court grants the motion with regard to all federal law claims and dismisses the state law claims for lack of supplemental jurisdiction.

Background

When considering a motion to dismiss a complaint, the Court accepts the facts stated in the complaint as true and draws reasonable inferences in favor of the plaintiff. Newell Operating Co. v. Int'l Union of United Auto., Aerospace, and Agr. Implement Workers of Am., 538 F.3d 583, 587 (7th Cir. 2008). The Court takes the following facts from the allegations in plaintiffs' amended complaint.

There are two groups of plaintiffs in this case. The first group (the "hauler plaintiffs") consists of companies in the business of hauling and removing private and commercial waste containers, commonly referred to as "roll off" containers. The second group (the "customer plaintiffs") consists of businesses that have employed one or more of the hauler plaintiffs in the past and wish to retain their services in the future. The defendants are Illinois municipalities that have enacted ordinances that establish exclusive contracts with companies other than the hauler plaintiffs to conduct all of the hauling of roll off containers within their borders. These ordinances prohibit the hauler plaintiffs from removing roll off containers from property within the defendant municipalities and prohibit the customer plaintiffs from hiring any hauler other than the one that holds the exclusive contract for garbage removal in a defendant municipality.

The challenged ordinances were passed pursuant to 735 ILCS 5/11-19-1, which gives municipalities the authority to enter into exclusive contracts for waste disposal. Plaintiffs allege, however, that this statute prohibits exclusive contracts for materials that can be recycled. Because the defendant municipalities' ordinances include recyclable materials, plaintiffs argue, the ordinances are not permitted by the state law.

Plaintiffs allege that the ordinances passed by defendant municipalities interfere with their business operations and impermissibly restrict their rights to enter into contracts. In count 1, they allege that the ordinances violate article I, section 10 of the United States Constitution (the Contract Clause) and interfere with their substantive due process rights under the Constitution's Fourteenth Amendment. In counts 2 and 3, plaintiffs allege that the ordinances tortiously interfere with their existing business relationships and prospective economic advantage, in violation of Illinois common law. In count 4, plaintiffs allege that the ordinance violates section 2 of the Sherman Act, 15 U.S.C. § 2. In count 5, they allege that the ordinances violate the Illinois Antitrust Act, 740 ILCS 10/3.

Discussion

Defendants have moved to dismiss all of plaintiffs' claims under Federal Rule of Civil Procedure 12(b)(6). Federal Rule of Civil Procedure 8(a) "requires that a complaint contain a 'short and plain statement of the claim showing that the pleader is entitled to relief.'" Killingsworth v. HSBC Bank Nevada, N.A., 507 F.3d 614, 618 (7th Cir. 2007) (quoting Fed. R. Civ. P. 8(a)). The statement must be sufficient to "give the defendant fair notice of what the . . . claim is and the grounds upon which it rests." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (citing Conley v. Gibson, 355 U.S. 41, 47 (1957)). Although the plaintiff is not required to give detailed factual allegations, she must allege facts that "raise a right to relief above the speculative level." Id.

A. Contract Clause Claim (Count 1)

The Contract Clause prohibits a state from passing any law "impairing the Obligation of Contracts." U.S. CONST. art. 1 § 10. Plaintiffs allege that the defendants' ordinances granting exclusive franchise contracts for waste hauling preclude plaintiffs from maintaining their businesses in violation of the Contract Clause.

Courts employ a three part test to determine whether a law violates the contract clause. A court must determine whether the ordinance operates as a substantial impairment of existing contractual relationships; whether the municipality has a significant and legitimate purpose justifying the ordinance; and whether the effect of the ordinance on contracts is reasonable and appropriate given the public purpose behind the ordinance. Chicago Bd. of Realtors, Inc. v. City of Chicago, 819 F.2d 732, 736 (7th Cir. 1987), citing Energy Reserves Group, Inc. v. Kansas Power & Light Co., 459 U.S. 400, 411-12 (1983).

To satisfy the first element of the test, the contract allegedly impaired must exist at the time the challenged law is enacted. Texaco, Inc. v. Short, 454 U.S. 516, 531 (1982). The plaintiffs' complaint identifies no contract of any plaintiff that existed at the time any of the defendant municipalities' ordinances were passed and was thereby impaired. The complaint makes passing reference to "maintaining existing contracts," Compl. ΒΆ 65, but it says nothing about which (if any) plaintiffs held such contracts, the terms of those contracts, or how they were impaired by the contested ordinances. Though Rule 8(a)(2) does not require a complaint to include "detailed factual allegations, a plaintiff's obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Bell ...


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